Durban - The National Energy Regulator of South Africa (Nersa) has ruled that the eThekwini Municipality cannot impose an 18.49% tariff increase for electricity and instead must stick to the 15.1% increase that the body had recommended.
Nersa spokesperson Charles Hlebela said it could confirm that it had approved a 15.1% electricity tariff increase for eThekwini Municipality.
“The 15.1% is in line with the municipal tariff guideline increase and tariff benchmarks for the 2023/24 financial year.”
This comes after the City had been allowed to make a submission to Nersa last month on its proposed 18.49% increase. Ratepayers have cried foul over the City’s tariff increases for electricity, water and property rates, and some ratepayer groups have lodged a dispute.
EThekwini Municipality’s head of communications, Lindiwe Khuzwayo, said the City had accepted Nersa’s benchmark ruling. However, she said this would affect the financial sustainability and viability of the City and the sustainability of electricity supply due to less investment in infrastructure as costs would have to be cut.
“This will impact on the financial sustainability of the City. It will also impact on the quality of service to our consumers as the lower investment in infrastructure may result in increased outages. Load shedding may cause even greater damage to our fragile infrastructure after the floods.”
She added that the City had tried to keep tariff increases low. “We still have to pay Eskom every month and meet our other day-to-day obligations. By lowering the tariff increase, in effect we are providing electricity at cost.”
She also said that over the past six years, electricity sales had drastically dropped due to various factors that included the general downturn of the economy, the closure of many businesses, among other reasons due to the ripple effects of the pandemic, the July unrest as well as the April 2022 floods.
“Load shedding and customers struggling to pay their municipal bills has also dented our sales. The combined effects of this over the past few years has meant the cutting of the budget to meet the Nersa benchmark increases. The City finds itself in a critical situation where it now needs to make up for these losses as the electricity infrastructure has borne the brunt of the accumulated decrease in revenue.”
Alan Beesley, an ActionSA eThekwini caucus member, said it was worrying that the municipality was one of only six municipalities out of 257 across the country that had approved electricity increases above Nersa’s guidelines.
“This clearly demonstrates the uncaring and out-of-touch political leadership running the municipality. It is a pity that the other above-inflation tariff increases (rates, water, sewage etc) that the municipality has passed on to its residents and businesses do not have a regulatory body that approves increases. The 3.4% drop in electricity costs will provide some relief.”
IFP eThekwini councillor Mdu Nkosi said that the 18.49% electricity tariff increase was one of the reasons the party did not support the municipality’s budget. “We welcome the decision to not approve that electricity tariff increase as it was too high. We feel this is good news for the ratepayers as the 15.1% electricity increase will bring some relief to the consumer. It is also good news for the parties who voted against the 18.49% tariff increase.”
DA caucus leader in eThekwini, Thabani Mthethwa, said that the party was very happy with Nersa’s decision.
“We rejected the budget as we were concerned that the electricity tariff increase was an exorbitant amount. We already have ratepayers who are struggling to pay rates.”
Mthethwa added that the City’s infrastructure was fragile. “We are faced with power outages in eThekwini and all of it is not because of load shedding, our infrastructure needs attention and it’s not fair to ratepayers to pay exorbitant amounts for electricity when there isn’t a steady power supply. We do feel 15.1% is also high, but we respect the decision by Nersa.”